Serious negative consequences can arise in an accident case due to material representations, for example, a client & victim of an auto accident did not name all of their household members when taking out their insurance policy. Now, when that occurs, it may have saved them money initially at the time of purchase, but it can hurt them at the time when they need to utilize the benefits. In the event that they are in an accident and the insurance company does their investigation, and the carrier finds out that there are various household members at the insured’s residence and/or live with them and were NOT named in the application for insurance, PIP benefits may be denied.
Misrepresentations or concealments of material facts made by an insured prior to a loss will typically provide the insurance carrier with a right to rescind the policy. On the other hand, misrepresentations made after a loss will typically provide the insurer with a right to deny coverage for the submitted claim. In Florida, the defense of misrepresentation is derived from Florida statutes, which allow insurance carriers to cancel coverage if the carrier can show a misrepresentation in an insurance application that is material to the risk insured. The law, in essence, states that a “misrepresentation, omission, concealment of fact, or incorrect statement” can prevent a claim recovery.
It is always recommended when completing and submitting an application for any type of insurance that the responses to questions therein be completely honest and forthright, because when one is involved in an accident, and medical treatment is necessary, PIP insurance coverage should be available for use. The amount of money that the insurance company would potentially pay out on a claim far exceeds whatever one would be saving at the time of policy purchase by not fully cooperating and honestly answering the questions in the application.
Needless to say, the foregoing applies to any type of insurance application, and by not completely and honestly answering the questions in the initial application and/or later on updating the answers, the result may have significant adverse consequences and potentially be the source of or basis for a denial of needed benefits and/or voiding the policy completely.